IN TODAY'S CHICAGO REAL ESTATE MARKET, Written Buyer-Approval No Longer A Luxury!
EXPERIENCED REAL ESTATE PROS PREDICT A BUMPY ROAD, EVEN FOR THOSE WITH MORTGAGE PRE-APPROVALS IN HAND!
Ahhh . . . the Old Chicago Real Estate Market! What seems like an eternity ago - let's say, perhaps . . . 2005!
Potential buyers would call Real Estate Consultants to check out a property they saw online. Or read about in the Newspaper Classifieds. Or perhaps drove by.
Back in those heady days, our Team saw many agents that simply got in their car and showed the home to the still-anonymous caller. After all - almost anybody could get a home loan . . . RIGHT?
Not anymore, according to Reporter Mary Ellen Podmolik in the May 8th Edition of the Chicago Tribune.
It seems, in the modern day - 2009 - that is rarely true. Lending standards are far more stringent, as minimum credit scores are higher, as are required down payments. Employment itself is a tenuous proposition, as an estimated 9.1% of the labor force in the Chicago Metro Area was out of work at the end of March, according to statistics compiled by the U.S. Department of Labor, and the IL Department of Employment Security.
Often times, these days, a "buyer's word" is not enough anymore to warrant a trip to view properties. Most experienced Real Estate Consultants these days require at minimum a Pre-Approval Letter, based on hard-verified income, assets, and FICO Credit Score. Many, especially those serving banks owning properties or distressed homeowners who might soon lose their home to foreclosure, insist on a second pre-approval with a lender they personally have worked with.
It is important to differentiate a Pre-Approval Letter from a Letter of Pre-Qualification.
The Pre-Qualification is usually based on a short phone conversation only, where the borrower simply answers questions as to his employment status, savings, and the quality of his or her credit. These days, such a Pre-Qual is simply not acceptable to most buyers agents, and rarely passes muster with the listing agents who present the incoming offers to their seller clients.
Often times, even a thorough vetting of the prospective buyer on the front end fails to forestall trouble before the loan is fully approved. With the psychology at most lenders these days leaning to conservative funding decisions, often times relatively small changes in an individual's or couple's credit status can quickly, and perhaps fatally, impact their chances of obtaining financing on their new home.
One big red flag - newly-opened credit lines, or big draws against an old line - could result in mortgage denial, if not properly explained.
So, it appears, the old days of easily browsing and viewing properties, without going through the formal loan approval process, may be going by the wayside, due to the added, necessary vigilance of Real Estate Professionals on both sides of the transaction.
DEAN MOSS & DEAN'S TEAM CHICAGO
